Merino flock production characteristics have a major impact on whole farm profit.

Abstract

Proc. Assoc. Advmt. Anim. Breed. Genet. Vol13 MERINO FLOCK PRODUCTION CHARACTERISTICS HAVE A MAJOR IMPACT ON WHOLE FARM PROFIT D. P. Windsor' and J. M. Young2 `Agriculture Western Australia, Great Southern Agricultural Research Institute Katanning WA 63 17 2Farming Systems Analysis Service, RIMB 309 Kojonup WA 6395 SUMMARY We used Agriculture Western Australia's Model of an Integrated Dryland Agricultural System to compare the profitability of Merino flocks whose production characteristics were derived from Western Australian wether trial data. Differences in fleece weight, fibre diameter and live weight between flocks resulted in differences of up to $96,000 pa in whole farm profit. Keywords: Wether trial, benchmarking, flock comparison, farm profit, MIDAS INTRODUCTION Wether trials are one of the few means available to commercial woolgrowers for assessing the genetic merit of their flocks. The amalgamation of wether trial data to produce bloodline comparisons (Coelli et al. 1996, 1998) or linked analyses across sites (Clarke and Windsor 1999) allows trial participants to benchmark their own flock performance across a wide section of the wool industry. Economic analysis of bloodline performance indicated a difference in gross margin of $10.40/DSE (Coelli et al. 1998) which equated to a range of net farm income from -$8 to $136/Ha (Sackett 1998). Gross margin analysis or farm profit analysis based on wether the different classes of sheep which make up a typical Merino enterprises which compete for resources and contribute to farm mathematical model to investigate the influence of differences whole farm profit. performance alone flock and does not profit. This study in flock production does not represent consider the other used a whole farm characteristics on MATERIALS AND METHODS Wholefarrn profit was calculated for a typical farm rumring a self replacing flock of sheep based on the genotypes represented in the linked WA wether tri,als (Clarke and Windsor 1999). Several steps were involved: Flock performance. Calculation of clean fleece weight (CFW) and fibre diameter (FD) classes of stock on the farm from the wether trial results (Table 1). Estimates of the CFW for different age groups of animals was based on results from the Katanning Base Flocks pers. comm.). Mated ewes were assumed to cut IO % less wool which was 2 % finer than of the same age (adapted from Turner and Young 1969). for other and FD (J. Greef wethers 432 Proc. Assoc. Advmt. Anim. Breed. Genet. Vol13 Table 1. Scaling factors used to calculate CFW & FD for different from 2.5 year old wether data from wether trials Age at Shearing Lambs Hoggets 2.5~0 3.5yo 4.5yo 5.5yo CFW -70% -10% From trial -2.3% -4.4% -4.9% FD -8.5% -8.5% From trial +2.6% +3.9% +5.2% age groups and for ewes Fleece values. Calculation of fleece value for each class of stock from CFW and FD. The value of clean fleece wool by fibre diameter was based on price received at Fremantle during 1993 to 1997 inclusive and a regression equation of clean fleece value and fibre diameter was developed. Price = 1235 1.7 - 1277 * FD + 46.4 * FD' - 0.568FD3 (r' = 0.97). The clean fleece price was reduced by 10 % to approximate a sweep-the-board price which allows for a proportion of shorn wool being pieces (8 %), bellies (8 %) and locks (4 %). The sweep-theboard price was then further reduced by 4 % for wool tax and 15&g for selling costs to achieve a net in the bank, sweep-the-board clean price (NIB-STB). Fleece value was calculated by multiplying the CFW by the resulting NIB-STB price. Calculation of sale sheep values. for a set price per head but the sale of liveweight (LW). This approach it under-estimates the impact of LW The sale price of ewes was based on selling the ewes as breeders price of wethers (as shippers) was based on a price per kilogram over-estimates the impact of LW on the sale price of wethers but on the sale price of ewes. Feed intake. Calculation of energy requirements and intake capacity of each class of stock based on liveweight of animals using Australian Feeding Standards (SCA 1990). The different liveweight of wethers measured in the wether trials was represented by altering the standard reference weight (SRW) for each team. This approach assumes that both energy requirement and intake capacity increase proportionately with increased liveweight and that conversion efficiency is not altered. Calculation of wholefarm profit using the Great Southern version of MIDAS Farm Profit. (Morrison et al. 1986, Young 1995). MIDAS is a wholefarm optimising model that calculates the most profitable rotations, crop area and stocking rates given productivity of crops, pasture and sheep, feed requirements of sheep and costs of producing crops and running sheep. For this analysis the model was constrained to the same ~LJGK structure for each team, selling ewes at 5.5 years and wetherr, cri 2.5 years. The flock was a self-replacing flock lambing in JuIylAugust with shearing in January and sheep sold off-shears in January. The farm profit calculated by MIDAS includes an operator allowance, depreciation, repairs and maintenance, professional fees, rates, telephone and electricity. It also includes an interest cost on holding assets. This cost is equivalent to having an interest only loan to finance the purchase of machinery and livestock. 433 Proc. Assoc. Advmt. Anim. Breed. Genet. Voll3 RESULTS Farm profit ranged from $4 000 to $101 000 per annum cut more wool than the average (Figure 1). None of the than a micron broader than the average. Six of the eight average wool cut with a fibre diameter that was average or (Figure 1). The most profitable flocks all most profitable third of flocks was more most profitable flocks combined an above finer. Farms running the most productive flocks are predicted to have an optimal crop area about 8 % less than the average. Running the least productive flocks means that a 13 % increase above the average crop area would be required to maximise farm profit. 5 22 24 26 26 Fibre Diameter (microns) Figure 1. MIDAS whole farm profit derived from wether trial production characteristics. Net value of the 4 tooth wether fleece accounted for 94.4 % of the variation in wholefarm profit. Including liveweight accounted for a further 3.2 %. Using fleece value of the whole flock (by including different age groups and ewes) accounted for a further 2.1 % and including crop area only made a small impact (0.2 %). This probably underestimates the influence of optimising crop area as crop area is closely correlated to fleece value and would be accounted for as a fleece value effect. 434 Proc. Assoc. Advmt. Anim. Breed. Genet. Vol13 DISCUSSION These results emphasise the importance of Merino flock production characteristics to farm profitability and the viability of the wool production. This highlights the opportunity available to many Western Australian woolgrowers to increase farm income by identifying and acquiring genetically superior animals. The high mobility of commercial woolgrowers between ram sources (Pope et al. 1996) will, if supported by good decision making tools, help to maintain the economic viability of their wool enterprises. Farm profit ranged from $4,000 corresponds closely to the -$8 to Sackett (1998). Using wholefarm different genotypes. The majority value of the whole flock rather fleece value of the whole Bock flocks the premium received for flocks. to $101,000 or $5.50 - $105 per winter grazed hectare and this $136/Ha estimate derived from the data of Coelli et al (1998) by analysis increases the accuracy of predicting the profitability of of this increase in accuracy comes from calculating the fleece than just the fleece value of the wethers. Not accounting for the underestimates the profitability of finer flocks because in these the hoggets wool is greater than the premium received in broader An implication of the way energy requirement and CFW have been calculated from team LW and team CFW is that heavy cutting sheep (of the same LW) have a higher wool growth efficiency. This contrasts with heavy sheep which we have assumed achieve this by eating more per head while having the same conversion efficiency of energy into LW. This means the level of feed utilisation per kg does not vary between genotypes of sheep and that comparisons of relative performance of genotypes are valid across a range of stocking rates. These assumptions need to be examined in detail to ensure the economic implications of wether trials a.re calculated correctly. These data flocks have cannot be importance support the conclusion an important effect on fully compensated for of genotype selection as that differences in the genotype and performance of Merino farm profitability and also show that poor flock performance by changes to the farm enterprise mix. This highlights the a significant farm business decision. REFERENCES Clarke, B.E. and Windsor, D.P. (1999) Proc. Assoc. Advmt. Anim. Breed. Genet, Wool Industry Day, July, Mandurah WA Coelli, K.A., Atkins, K.D., Casey, A.E. and Semple, S.J. ( 1996) Wool Tech. Sheep Breed. 44: 178 Coelli, K.A., Atkins, K.D., Casey, A.E. and Semple, S.J. 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